Here is What a Title Search Actually Looks Like Behind the Scenes

Ways to Prevent Last Minute Surprises

Before I dive into this month’s topic, a brief update on the FinCEN Residential Real Estate reporting rule. March 1st was the first day of this new rule, which many saw as government overreach. On March 19th, a U.S. District Court in Texas vacated the FinCEN reporting rule, finding it, in fact, exceeded the authority under the Bank Secrecy Act. Some escrow officers are still asking us as a title company to confirm if any reporting is still required. With the ruling, there is currently no reporting required, BUT it’s important to keep in mind that a new version of the rule could be introduced at any time. In the past, FinCEN typically announced reporting rules in advance, so stay tuned.

So, this month I want to go over what happens behind the scenes in a title company operation and share some tips that will help close your deals on time or with less headache.

Clearing up title issues early or even just knowing everything you need to know about the title of a property can provide peace of mind and make you look like a rock star real estate agent. I always recommend my clients (realtors) order their preliminary title report as soon as they know they have a listing agreement. In SoCal, the seller customarily chooses the title company, so why not get ahead of the game?

A preliminary report will uncover the following items:

Current vesting and ownership
Questionable deed transfers
Legal Description and easements
Open Loans (Deeds of Trust)
Personal tax liens/judgments (requires cross-referencing statement of information)
Agreements, Covenants, Conditions and Restrictions
And more…

Some items that could make a deal very challenging are finding out there is large HERO lien or there is a $100,000 judgement owed to BMW, IRS liens for tens of thousands of dollars, or possibly – the seller you have signed listing agreements with, should not be acting alone. Can you really trust every seller to tell you all of this? Sometimes they don’t even know or are hoping we won’t notice!

Pitfall:

In most cases where an agent does not have a title company give a preliminary report or at least a full profile with chain of title, they rely on the basic report that is found on in their MLS account. This is a huge mistake. This report does pull from the same data source as a title uses but the data is all automated. It is incomplete and subject to many errors. These basic reports are only meant to give you a basic idea of what you are working with. The owner's name included in that report will only allow so many characters – so what if there are 6 owners? What if the ownership is split between 3 different deeds? Unless you are an experienced title examiner, this will be difficult to research on your own.

Solutions for Success:

In my opinion, your transactions will go smoothly from start to finish if you order a full property profile and a preliminary report as soon as you have a listing agreement. If the owner is an LLC or INC or a trust where the original trustee has passed away, provide the entity docs to title early so we can let you know who your signers should be. We can work together to make sure you have no issues later. If you aren’t sure who you will use for title, you can, at minimum request from me a full property profile. This way, we can go over the main ownership and liens affecting the property. I’m always happy to help you and don’t expect every deal to land at my feet.

Need Help With a Property or Upcoming Listing?

If you have any questions about an upcoming listing or a property your buyer is interested in, feel free to reach out through my website or contact page. I’m always happy to help guide you in the right direction.

Continue Exploring

If you found this topic helpful, you can explore more insights and real-world guidance on The Title Beat, where we break down what really happens behind the scenes in real estate transactions.

For practical tools and helpful links, visit the Homeowner Resources section: www.thetitlebeat.com